Bull etf or Bear etf, which one to use?

Discussion in 'ETFs' started by losemind, Aug 30, 2012.

  1. losemind


    Bull etf or Bear etf, which one to use?

    Hi all,

    If I want to express a bullish view on SP500, I have two theoretically equivalent options (I am thinking of 2x or 3x):

    1. Long the bull 3x etf
    2. Short the bear 3x etf

    The holding period is probably 3 months, 6 months and 12 months.

    Which one shall I hold, the bull or the bear?

    Thank you!
  2. Neither. Read the Damn perspective.

    Use spy for long term.

  3. Well, shorting the short to give you long exposure is the sensible thing to do given that you will be able to collect the value of the price decay.

    As stated above, I would read the prospectus because levered ETFs give you DAILY returns not monthly or yearly. They are NOT made for long term buy & hold investments. If you want leverage try using options on an index or non-levered ETFs.

    Take a look at the long term performance of UPRO and SPXU vs. SPY and the S&P.
  4. losemind


    What's the fee structure of borrowing for shorting?

    Given the well-known price decay I would imagine it's pretty expensive to short?
  5. jb514


    Most leveraged etfs cost a fortune to borrow. Just trade the SPY
  6. axolotls


    In theory shorting every 2x and 3x ETF would be amazing.
  7. hft_boy


    Not really. Turns out that shorting the bull and bear 3x ETF (done properly) returns about 7-8% annually. Although I haven't done this specifically for SPY 3x ETFs.

    Point is, you're paying for the leverage either way.
  8. losemind


    Is it easy to borrow and short those etfs?

    What are the fees?

    Thank you!
  9. hft_boy


    Sorry -- I didn't mean that I've actually done this. I've only done the simulation (so no fees). I don't know about the short selling fees, but I assumed that they would be more than the expected profit, so that's why I didn't do it.
  10. axolotls


    Difficult. Hence, my semi-sarcastic post. You'll have better luck going the options route.
    #10     Sep 6, 2012